Alterra Power Announces Audited Results For The Six Month Fiscal Period Ended December 31, 2011

Wednesday, March 28, 2012

Alterra Power Announces Audited Results For The Six Month Fiscal Period Ended December 31, 201120:11 EDT Wednesday, March 28, 2012
(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, March 28, 2012 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) (the
"Company") today provided an update on its operations and reported its
financial and operating results for the six month fiscal period ended
December 31, 2011 (the "six month period"). The Company changed its
fiscal year end from June 30 to December 31, and as a result, the
Company is reporting on a short fiscal year from July 1, 2011 to
December 31, 2011. For further information, please see the Company's
Audited Consolidated Financial Statements and Management's Discussion
and Analysis.
Alterra continues to consolidate 100% of HS Orka and the Soda Lake
operations, and under International Financial Reporting Standards
(IFRS), Alterra's interests in the Toba Montrose run of river hydro
facility ("Toba Montrose") and the Dokie wind facility ("Dokie 1") are
now accounted for as equity investments. In certain statements in this
news release, the Company's results are disclosed as Alterra's "net
interest", which means the effective portion of results that Alterra
would have reported if each of HS Orka (75%), Toba Montrose (40%),
Dokie 1 (51%) and Soda Lake (100%) had been reported in accordance with
the Company's actual share ownership during the six month period and at
December 31, 2011.
Highlights for the period include:
Power production from Alterra's six power plants was at 102% of forecast
(1,300,566 MWh); Alterra's net interest in generation totalled 777,610
MWh, or 60% of the total.
Alterra's net interest in revenue for the six months was $54.9 million.
The Company's net interest in EBITDA for the six months was $23.3
million.
The Company received its first cash distribution of $5.1 million from
its 40% ownership interest in Toba Montrose.
Toba Montrose achieved "Final Completion" and subsequent to the period,
Dokie 1 also achieved Final Completion, formally marking completion of
all construction activities.
An operating permit was granted for the planned 80 MW expansions at the
Reykjanes geothermal power plant in Iceland.
The Company received the results from an arbitration proceeding
concerning the validity of a power purchase agreement ("PPA") between
HS Orka and a subsidiary of Century Aluminum Co. The results of the
arbitration were mixed, and the parties are currently engaged in
negotiations on a new PPA to support planned expansions.
Alterra signed an Impact Benefit Agreement with the Homalco First Nation
to advance the Bute Inlet hydro power project, which lies within their
traditional territories.
"Alterra achieved an important milestone at the end of 2011 when we
received our first dividend, on time, from the Toba Montrose hydro
project," said John Carson, Alterra's Chief Executive Officer. "The
continued strong performance of our operating portfolio provides us a
solid platform for our growth plans as we prepare for construction of
our next group of run of river hydro, wind and geothermal projects."
Financial Results
The Company began reporting under IFRS beginning July 1, 2011.
Comparative numbers at July 1, 2010 have been restated to reflect the
change in accounting standards. Material changes under IFRS include the
accounting for the Company's interest in Toba Montrose and Dokie
general partnerships, which are now equity accounted, but which had
previously under Canadian GAAP been proportionately consolidated.
The period ended December 31, 2011 is a short fiscal year from July 1 to
December 31, 2011. The comparative period of the twelve months ended
June 30, 2011 (the "prior year") only includes the consolidated results
of HS Orka since August 17, 2010, and of Plutonic Power Corporation
from May 13, 2011, the dates on which the Company acquired control. The
six month period results are therefore not comparable with the prior
period. The Company's next full fiscal year commenced on January 1,
2012.
The following table shows the Company's net interest in select operating
and financial results for the six month period, in addition to key
financial information extracted from the December 31, 2011 Audited
Consolidated Financial Statements ("consolidated results"). The
consolidated results are based on 100% of HS Orka and Soda Lake. The
net interest results reflect the Company's actual interest in all of
its operating assets.
(expressed in thousands of US dollars, except for production)
HS Orka
(75%)
Toba
Montrose
(40%)
Dokie
Wind
(51%)
Soda
Lake
(100%)
Exploration
and Head
Office
Net
Interest
Total
Consolidated
Results
Production (MWh)
457,090
176,159
110,697
33,664
-
777,610
643,116
Total Revenue
24,190
18,562
9,738
2,405
-
54,897
34,660
Gross Profit
6,676
12,499
6,822
(276)
-
25,721
8,625
EBITDA (a)
7,339
14,244
8,404
809
(7,505)
23,291
25,737
Total Assets
701,224
Total Liabilities
347,125
Cash and Cash Equivalents
22,239
Working Capital
4,619
(a) EBITDA is defined by the Company as earnings before interest, taxes,
foreign exchange, depreciation and amortization, as well as before
deductions for other gains and losses, amortization of below market
contracts, and value assigned to options granted. The Company discloses
EBITDA as it is a measure used by analysts and by management to
evaluate the Company's performance. As EBITDA is a non-IFRS measure, it
may not be comparable to EBITDA calculated by others. In addition, as
EBITDA is not a substitute for net earnings, readers should consider
net earnings in evaluating the Company's performance.
Revenue reported in the consolidated results for the six month period
was $34.7 million, while Alterra's net interest in revenue was $54.9
million. Dokie 1 revenue was higher than normal due to generation
running at 127% of plan for the period due to strong winds. The Toba
Montrose revenue was lower than normal due to the commencement of
warranty-covered penstock re-coating, which was scheduled for a period
when water flows are seasonally low. If the work had not been required,
the Company would have recorded an additional $0.7 million share of
revenue that would have been included in equity income.
Production costs reported in the consolidated results were $26.0
million, while Alterra's net interest in production costs was $29.2
million.
General and administrative expenses included in the consolidated results
were $9.8 million, including full consolidation of HS Orka's $3.4
million of general and administrative expenses, of which $1.8 million
relates to non-recurring arbitration costs.
Equity income reported in the consolidated results for the six month
period was $7.8 million, and included the Company's net interest in
Toba Montrose and Dokie 1.
Net other losses included in the consolidated results for the six month
period were $23.9 million, primarily due to a number of non-cash items
more fully described in our financial statements, including a $24.5
million loss related to a change in the marked-to-market value of HS
Orka's aluminum-linked PPAs due to a downward move in the future prices
of aluminum during the period. Aluminum spot prices declined 21.3% in
the six month period, from $2,503 to $1,971 per tonne (as at March 27,
2012, the aluminum price had risen to $2,137 per tonne). Following the
expiry in October 2011 of one of the PPAs with aluminum-linked pricing,
now only 36% of HS Orka's power sales are indexed to the price of
aluminum, as compared to 46% at June 30, 2011.
The Company recorded a net loss of $13.8 million in the consolidated
results ($0.03 per common share) in the six month period, compared to a
net loss of $11.5 million ($0.04 per common share) in the prior year.
Alterra's net interest in EBITDA for the six month period totalled $23.3
million, reflecting, among other things, the strong generation
performance of its operating assets (102% of budget).
At December 31, 2011, the Company had consolidated cash and cash
equivalents of $22.2 million (June 30, 2011: $68.3 million), while the
Company's net interest in cash and cash equivalents was $32.0 million.
The Company ended the period with consolidated working capital of $4.6
million compared to $40.5 million at June 30, 2011, and with a net
interest in working capital of $13.4 million. The changes from the
prior period in both cash and working capital included investment of
$6.8 million in plant and equipment, development costs of $4.4 million,
and repayment of $23.5 million of the Company's working capital
facility. The Company's new facility is for C$20.0 million and has been
extended to December 2012.
In February 2012, the company's 25% partner at HS Orka (a group of
Icelandic pension funds) increased their stake to 33.4% by investing
Icelandic Kronar 4.7 billion (approximately $38 million) in HS Orka,
resulting in the Company owning a 66.6% interest in HS Orka. The newly
invested funds are currently being held at HS Orka in preparation for
the Reykjanes expansion project.
Iceland Operations (75% Interest at December 31, 2011)
The 100 MW Reykjanes plant generated 380,834 MWh of electricity, 99% of
budget, and the 72 MW Svartsengi plant generated 228,618 MWh of
electricity, 98% of budget, and continued to supply 150 MW of thermal
energy for district heating.
In early 2012, the capacity of the Svartsengi plant was revised from
74.4 MW to 72.0 MW with the retirement of two 1.2 MW air-cooled binary
turbine generators. This has no impact on plant energy output as the
geothermal resource has been redirected to other turbines at
Svartsengi, and the retirement reduces both maintenance and capital
replacement costs.
Toba Montrose Operations (40% Interest)
The 89 MW Montrose Creek and the 146 MW East Toba River run of river
hydro plants generated 440,398 MWh of electricity in the period, which
was 93% of budget. Pursuant to an agreement reached at Final Completion
with the lead contractor, the penstock coatings at both the East Toba
and Montrose Creek facilities were inspected and repaired by the
contractor, requiring curtailment of both facilities from November 2011
to March 2012, a time when water flows and project revenues are
seasonally low. The repairs were planned and budgeted, and have been
completed. Both facilities will be ready for full operations when water
flows increase.
The firm energy allotment under Toba Montrose's PPA was increased by 10%
and as a result annual revenue at Toba Montrose is expected to increase
by 2.4%.
In December 2011 the Company received its first cash distribution of
$5.1 million from its 40% interest in the operating subsidiary for Toba
Montrose.
Dokie Operations (51% Interest)
The 48 turbine 144 MW Dokie wind farm generated 217,052 MWh of
electricity for the period, or 127% of budget. The operating subsidiary
for the wind farm also successfully reached agreement with its lenders
for term conversion of its loans, with final maturity in 2030, and the
first possibility for a dividend in June 2012.
Subsequent to the period, the firm energy allotment under Dokie 1's PPA
was increased by 10% and as a result annual revenue at Dokie 1 is
expected to increase by 1.2%.
Soda Lake Operations (100% Interest)
The 16 MW capacity Soda Lake geothermal plant generated a net 33,664 MWh
of electricity for the period, which was 93% of forecast. Subsequent to
the period, the US Department of the Treasury awarded the project a
grant of $2.1 million under Section 1603 of the American Recovery and
Reinvestment Tax Act of 2009.
Expansion and Development Projects
Alterra's Icelandic subsidiary HS Orka plans to expand the Reykjanes
plant's capacity to 180 MW in two phases of 50 MW and 30 MW and thereby
increase annual average generation by nearly 700,000 MWh, subject to
satisfactory resolution of all PPA issues and obtaining project
financing. During the period, HS Orka received the operating permit
required for the drilling of additional wells and other work necessary
for the 50 MW expansion. The 30 MW expansion will not require any
additional drilling as the utilized resource will be low pressure steam
generated from current operations.
The Company is currently in negotiations on a partnership agreement for
the Upper Toba Valley hydro project. The Company is currently
optimizing plant design and preparing for the construction of the
project, with a goal to complete all the steps required to commence
construction by the end of 2012. The two proposed run of river hydro
power plants would share much of the infrastructure already in place
for Toba Montrose, and are currently configured to total 124 MW of
capacity producing an average annual generation of 345,000 MWh. A 40
year PPA with BC Hydro is already in place.
Alterra holds a 51% interest in a potential expansion of the Dokie
operations with a projected addition to capacity of approximately 156
MW and expected average annual production of 357,000 MWh. The project
has received a BC Provincial Environmental Assessment Certificate. Data
collection for a resource assessment of the project is scheduled to be
completed by mid-year 2012, with a goal to complete all the steps
required to commence construction by the first quarter of 2013.
Alterra has agreed to purchase for approximately $6 million, subject to
a number of closing conditions, 10% of a 50 MW portfolio of five
photovoltaic solar facilities to be built in Ontario ("ABW Solar") by
First Solar, Inc. Alterra will serve as the managing partner of the
partnership owning ABW Solar. First Solar has received all the required
permits, and construction should begin in the second or third quarter
of 2012.
Exploration Projects
New geothermal concessions were acquired in the Upper Lillooet region of
southwestern British Columbia, and in southern Peru near Alterra's
existing concessions. Certain less-promising concessions in Nevada were
relinquished, and other concessions were sold. At the advanced-stage
Mariposa project in Chile, the Company is actively reviewing a number
of options for the next phase of exploration in 2012, including
entering into a partnership to fund the remaining exploration and
development costs.
The Company holds an early stage run of river hydro power project in the
Bute Inlet area of British Columbia with an estimated potential annual
generation of 2.9 million MWh. In July 2011, the Company signed an
Impact Benefit Agreement to advance this project, which lies primarily
within the traditional territories of the Homalco First Nation.
Outlook
Ross Beaty, Alterra's Chairman, said, "All of Alterra's six operating
plants are running well today and our three large growth projects in
wind, hydro and geothermal are advancing on schedule for construction
starting by early 2013. Our management team is strong and we have the
financial capacity to support this near-term growth. I look forward
with optimism to the year ahead as we build Alterra into a larger,
stronger, global clean power company".
Alterra Power will host a conference call to discuss financial and
operating results on Thursday, March 29, 2012 at 11:30 am ET (8:30 am
PT). North American participants dial 1-888-231-8191 and International
participants dial 1-647-427-7450, the conference ID is 6206 8808. The
call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/936819/1002039. The call will be available for replay for one week after the call by
dialing 1-416-849-0833 and entering replay pin number 6206 8808.
Cautionary Note regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information
that is forward-looking within the meaning of certain securities laws,
including information and statements regarding prospective results of
operations, financial position, cash flows or growth potential. These
statements are based on factors or assumptions that were applied in
drawing a conclusion or making a forecast or projection, including
assumptions based on historical trends, current conditions and expected
future developments. Since forward-looking statements relate to future
events and conditions, by their very nature they require making
assumptions and involve inherent risks and uncertainties. Alterra
cautions that although it is believed that the assumptions are
reasonable in the circumstances, these risks and uncertainties give
rise to the possibility that actual results may differ materially from
the expectations set out in the forward-looking statements. Material
risk factors include those set out in the management's discussion and
analysis section of Alterra's most recent annual report and quarterly
report, and in Alterra's Annual Information Form. Given these risks,
undue reliance should not be placed on these forward-looking
statements, which apply only as of their dates. Other than as
specifically required by law, Alterra undertakes no obligation to
update any forward-looking statements or information to reflect new
information, subsequent or otherwise.
SOURCE Alterra Power Corp.For further information: <p> Anders Kruus, Vice President, Corporate Relations<br/> Alterra Power Corp.<br/> Phone: 604.678.6743<br/> Email: <a href="mailto:info@alterrapower.ca">info@alterrapower.ca</a> </p>

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